Dick Wray

Executive Search

This material is copyright 2008 Dick Wray. Please visit DickWray.com for detailed copyright information or you may contact us at info@dickwray.com.

Financial Overview — August 2008

  • LEBANON, Tenn. — CBRL GROUP INC., parent of the CRACKER BARREL OLD COUNTRY STORE family dining chain, said Friday that its board had authorized the repurchase of up to $65 million of common stock. Nearly 22.15 million shares of CBRL were outstanding as May 2. In trading Friday, CBRL’s stock rose 2.8 percent to close at $24.85. CBRL operates 577 Cracker Barrel restaurants and adjacent gift shops in 41 states.
  • SEATTLE — STARBUCKS CORP., blaming slower customer traffic and costs for its “transformation agenda” and impending closure of 616 coffeehouses, has reported its first quarterly loss as a public company. Saying it again was cutting back on planned openings, Starbucks posted a net loss of $6.7 million, or 1 cent per share, for the third quarter ended June 29. In last year’s third quarter Starbucks earned $158.3 million, or 21 cents per share. Same-store sales fell by “mid-single digits,” which company officials described as a slight deterioration from the second quarter. Net revenue rose 9 percent to $2.6 billion. The net loss reflected charges of $167.7 million, or 14 cents per share, related to the planned closures through next March. Blaming the “perfect storm” economy, chairman and chief executive HOWARD SCHULTZ said customers remain loyal to the Starbucks brand but are visiting less frequently because of financial pressures. New openings planned for the remainder of the year were lowered by about 120 locations to a total of 900 stores. Last year, Starbucks added 1,800 locations. Company officials also backed off slightly on plans for international expansion, which previously was characterized as a bright growth sector. Openings abroad of 825 outlets now are planned instead of 975 units.
  • MINNEAPOLIS — Even while warning of possible branch closures, FAMOUS DAVE’S OF AMERICA INC. posted a 6.2-percent increase in second-quarter profit to $2.3 million, or 23 cents per share, and a 15.6-percent surge in corporate revenues to $38.8 million. The operator or franchisor of 171 barbecue restaurants expressed caution about the rest of the year, however, noting that operating and food costs are expected to rise as efforts to boost customer traffic remain challenging. Famous Dave’s said it will evaluate the health of corporate restaurants, which could result in closures or impairment charges. For the quarter ended June 29, the franchisor’s restaurants raised prices an average of 3.8 percent. A possible price hike in October of another 2 percent would help offset an expected 5-percent jump in chicken costs when Famous Dave’s contract expires in September, the company indicated.
  • Sales Increase for 17th Consecutive Quarter at Bruegger's. New menu offerings and an appealing value contribute to solid performance. Marking 17 consecutive quarters of growth, Bruegger's Enterprises, Inc. today announced second quarter system-wide gross sales of $46.14 million, a 11.3 percent rise over $41.46 million for the same period in 2007. Revenue for comparable sales grew 2.9 percent at company locations and 3.1 percent system-wide for the second quarter ending July 8, 2008. 'Bruegger's solid performance during a challenging second quarter directly relates to what we offer our guests and how well it resonates with them,' said Bruegger's Chief Executive Officer James J. Greco. 'At Bruegger's, we offer fresh, wholesome meals at fair prices in a comfortable setting with memorable service, and our guests appreciate that given the current economic climate impacted by rising energy and food costs.' The company also noted that sales during the quarter were negatively affected by flooding in Iowa that closed three bakeries and a Michigan bakery closed due to fire.
  • MINNEAPOLIS — Bucking prevailing foodservice trends, BUFFALO WILD WINGS INC. on Tuesday reported a 46-percent jump in second-quarter profit and said same-store sales rose 8.3 percent at corporate restaurants and 4.5 percent at franchised branches for the three months ended June 29. The operator or franchisor of 521 restaurants earned $5.6 million, or 31 cents per share, for the period. Revenue rose 28.8 percent to $97.9 million, reflecting 24 more restaurants than in the same period last year.
  • GLENDALE, Calif. — DINEEQUITY INC., parent to the IHOP and APPLEBEE’S brands, swung to a second-quarter net loss on large one-time charges related to last year’s Applebee’s acquisition, which was funded heavily by debt, and recent sale-leaseback transactions involving DineEquity-owned Applebee’s restaurant locations. For the three months ended June 30, DineEquity lost $19.4 million, or $1.42 per share, versus a year-earlier profit of $14.1 million, or 82 cents per share. The latest quarter included a non-cash impairment charge of $41.1 million related to the sale-leaseback of 181 corporate Applebee’s properties, an amount DineEquity said reflected the “deterioration in domestic real estate and credit markets.” The company also logged interest expense of $51.6 million, up from $3.3 million a year before. Quarterly revenue increased to $424.1 million, from $89.5 million in last year’s second quarter. The jump was driven mostly by the Applebee’s acquisition, which increased DineEquity’s mostly franchised system to more than 3,300 restaurants, including the 1,990-unit Applebee’s and 1,353-unit IHOP chains. Same-store sales rose 2.6 percent at IHOP units, but fell 1.7 percent at U.S. Applebee’s restaurants, DineEquity said.
  • The Cheesecake Factory Reports Results for Second Quarter of Fiscal 2008. Total revenues increased 9% to $407.1 million in the second quarter of fiscal 2008 from $373.2 million in the prior year second quarter. Net income and diluted net income per share were $19.1 million and $0.29, respectively. Total revenues increased 9% to $407.1 million in the second quarter of fiscal 2008 from $373.2 million in the prior year second quarter. Net income and diluted net income per share were $19.1 million and $0.29, respectively.
  • DENVER — New stores, more customer traffic and higher prices fueled a 22.5-percent year–to–year surge in second–quarter net profit for CHIPOTLE MEXICAN GRILL INC., its officials said Wednesday. For the three months ended June 30, Chipotle earned $24.5 million, or 74 cents per share, versus $20 million, or 60 cents per share, a year earlier. Analyst had expected per–share earnings of 75 cents. Revenue rose 24.2 percent to $340.8 million. The chain of more than 775 fast–casual outlets posted a 7.1–percent increase in same–store sales. However, rising food and advertising costs pushed unit–level margins down to 22.4 percent, from 23.2 percent a year earlier. The company still expects to grow pershare earnings at an average annual rate of at least 25 percent, and is sticking with plans to open 130 to 140 new restaurants this year.
  • HUNTINGTON BEACH, Calif. — Blaming the economy and higher costs, BJ’S RESTAURANTS INC. Thursday reported a 12–percent drop in net profit for the second quarter ended July 1 to $2.9 million, or 11 cents a share, though revenues rose 16 percent to $92.2 million. The casual–dining/brewhouse chain’s same–store sales rose 0.6 percent, on top of a 7.5–percent second–quarter jump last year that was BJ’s biggest quarterly increase since 2004, it noted. Among BJ’s first–half initiatives were the launch of a curbside cashiering service, call–ahead seating, expanded delivery, new lunch specials, enhanced happy hours and more print media support for new entrees. In the second half, BJ’s plans to feature online ordering, new entrees, seasonal beers and a wine program update.
  • EMERYVILLE, Calif. — JAMBA INC. operator or franchisor of 736 JAMBA JUICE shops, blamed tightened consumer spending for a 6.8–percent drop in second–quarter same–store sales. The result for the three months ended July 15 reflects samestore decreases of 7.3 percent at company stores and 5.1 percent at franchised locations, Jamba said. Preliminary unaudited corporate revenue for the quarter rose 10 percent from a year earlier to $98.6 million, although analysts’ consensus forecast was for $102.4 million, according to First Call/Thomson Financial. Jamba said it will focus on value and product innovation to protect its chain from incursions by quick–service competitors pushing new smoothie items. Jamba pointed to its granola–topped spoonable breakfast smoothies as successfully driving morning traffic, and said the chain now will sell a value–priced Orange Refresher moothie, $2.95, for a limited time. On the company’s website, a two–for–one coupon offer promotes the new all–fruit smoothie. Jamba plans to release full second–quarter results Aug. 21.
  • SCOTTSDALE, Ariz. — P.F. CHANG’S CHINA BISTRO INC. on Wednesday reported a 1.3–percent rise in second–quarter profit despite a lower–than–expected revenue gain and negative same–store sales at the company’s namesake and PEI WEI ASIAN DINER chains. The company said its focus on controlling costs and improving unit–level margins helped it report profit of $9.4 million, or 39 cents per share, for the quarter ended June 29. However, the profit was suppressed by losses related to the newly closed TANEKO JAPANESE TAVERN pilot restaurant in Scottsdale. P.F. Chang’s revenues for the June 29–ended quarter rose 14 percent to $304.1 million. Sales at the 182–unit flagship chain were $231.8 million as its same–store sales fell 2.3 percent. Sales at the 159–unit Pei Wei chain were $72.1 million, and were off 3.2 percent on a same–store basis.
  • ST. LOUIS — PANERA BREAD CO. credited cost cuts and an increase in menu prices for a 24–percent jump in net income for the second quarter ended June 24. Revenues rose 27 percent, reflecting same–store sales gains of 6.5 percent for company units and 4.8 percent for franchised branches. Profits for the period were $15 million, or 52 cents per diluted share. Revenues were $320.9 million. The operator or franchisor of 1,270 bakery–cafes said it absorbed a $6.3 million spike in wheat costs during the quarter. Panera said it paid $15 per bushel for the grain, compared with an average of $5.80 in last year’s second quarter. Panera revealed last month that it had locked in a cost of $10 per bushel for 95 percent of the wheat it expects to buy during the first half of 2009. Chief executive RON SHAICH said the franchisor realized cost savings from the discontinuation of its Crispani flatbread pizza, the introduction of grilled breakfast sandwiches as an alternative to breakfast quiche, and new media campaigns.
  • ANN ARBOR, Mich. — DOMINO’S PIZZA INC. has reported a surge in second–quarter profit from year–earlier earnings that were sunk by one–time costs related to a recapitalization. For the quarter ended June 15, net profit was $18.7 million, or 32 cents per share, Domino’s said Tuesday. The company undertook a recapitalization last year, and in the comparable quarter booked charges of 24 cents per share from higher interest expenses and legal fees. Latest–quarter corporate revenues dipped nearly 2 percent to $334.3 million. U.S. same–store sales fell 5.4 percent.
  • CARPINTERIA, Calif. — Same–store sales rose 4.9 percent at CARL’S JR. and 5.7 percent at HARDEE’S for the four weeks ended July 14, driven by higher–priced menu items, brand owner CKE RESTAURANTS INC. said Tuesday. The monthly results compared with year–ago same–store sales increases of 3.1 percent at Carl’s Jr. and 1.1 percent at Hardee’s. ANDREW PUZDER, CKE president and chief executive, credited the latest gains to each chain’s version of the Prime Rib Burger, their highest–priced burger to date. Including such thin–sliced–meat–as–a–condiment signatures, CKE’s sister chains have focused on higher–quality, higher–priced items even as the soft economy has prompted competitors to cut prices and feature value menus.
  • IRVING, Texas — CEC ENTERTAINMENT INC., operator or franchisor of 537 CHUCK E. CHEESE’S pizza and entertainment restaurants, reported a 32.9–percent increase in net income for the second quarter on increased revenue and a large year–to–year drop in asset impairment charges. For the quarter ended June 29, CEC earned $11.3 million, or 48 cents per share, versus $8.5 million, or 26 cents per share, in the same quarter last year. Asset impairment expenses were slashed to $137,000 from $1.3 million a year ago. Revenue in the latest quarter rose 7 percent to $192.5 million. New–store openings and a same–store sales gain of 5.7 percent drove the top–line increase, CEC said.
  • GLENDALE, Calif. — APPLEGROVE RESTAURANTS, the second–largest APPLEBEE’S franchisee, has been acquired by a Poland–based group that operates more than 270 restaurants in seven countries, officials said Monday. Terms were not disclosed. Atlanta–based AppleGrove, which has more than 100 Applebee’s in eight states, sold an 80–percent stake to a subsidiary of AMREST HOLDINGS N.V., based in Wroclaw, Poland. Initially a joint venture for Europe by American Retail Concepts and Yum! Brands, AmRest’s operations there include KFC, Burger King, Starbucks Coffee and Pizza Hut. AppleGrove founder STEVE GROVE remains a minority owner.
  • NEW YORK — An affiliate of landlord FORTRESS INVESTMENT GROUP has offered to take over the operations of 127 Ryan’s and Fire Mountain restaurants from BUFFETS HOLDINGS INC., which filed for Chapter 11 bankruptcy protection in January, a Fortress spokesman said. Fortress, which owns the master lease for the units, made the offer in a motion filed in federal bankruptcy court in Delaware. Buffets, however, recently sought court permission to reject the master lease for those restaurants so it could close them by the end of August, the company said July 10. A hearing is scheduled for July 30. Eagan, Minn.–based Buffets said negotiations with Fortress had “not been productive.” Buffets and its franchisees operate 569 Old Country Buffet, HomeTown Buffet, Ryan’s, Fire Mountain and Tahoe Joe’s Famous Steakhouse restaurants in 39 states.
  • HOUSTON — The board of LANDRY’S RESTAURANTS INC. is advising shareholders to vote in favor of the $21–a–share going–private buyout offer that was tendered last month by chairman, chief executive and president TILMAN J. FERTITTA. The recommendation, which was included in a proxy statement filed Thursday, stresses that Fertitta had no part in the deliberations. The board voted unanimously to recommend acceptance of the $415 million share purchase. Fertitta would also assume the dining and entertainment company’s $885 million in debt, which raises the total value of the deal to $1.3 billion. Fertitta, the company’s founder, already owns 39 percent of Landry’s. Fertitta had originally bid $23.50 per share for the company, but lowered his offer as the credit markets deteriorated. Landry’s operates 139 casual restaurants nationwide, the two Golden Nugget casino–hotels in Nevada, an aquarium and other entertainment facilities. Its restaurant brands include Landry’s Seafood House, Chart House, Rainforest Cafe and Salt Grass Steak House.
  • DEERFIELD, Ill. — COSÌ INC. on Thursday reported a 2.2–percent rise in systemwide same–store sales for the second quarter ended June 30, citing improvements at company and franchised restaurants. Same–store sales rose 2.3 percent at the company fast–casual sandwich specialty outlets and 1.5 percent at franchised branches, Così said. The company, which operates 102 restaurants and is franchisor 43 others, said total revenue for the quarter grew 3.6 percent to $36.7 million, compared with $35.4 million a year earlier. Così said it would release full quarterly results Aug. 7.
  • LOUISVILLE, Ky. — Despite a 12–percent drop in U.S. operating profit, YUM! BRANDS INC. posted a 4–percent increase in second–quarter net income as “exceptional profit growth” abroad offset continued bottom–line pressures at domestic restaurants. For the three months ended June 14, Yum earned $224 million, or 45 cents per share, compared with year–earlier earnings of $214 million, or 39 cents per share. Corporate revenues rose 12 percent to $2.65 billion. Yum, which is operator or franchisor of more than 35,000 KFC, Pizza Hut, Taco Bell, A&W All American Foods and Long John Silver’s restaurants, said higher commodity costs in the United States led to a 2.9–percentage–point drop in restaurant margins for the quarter. Systemwide same–store stores at U.S. locations rose 2 percent, compared with flat first–quarter results versus a year earlier. The Yum system’s restaurants in mainland China, Thailand and Taiwan posted same–store sales growth of 14 percent and operating profit growth of 38 percent. Restaurants in all other international markets posted increases of 4 percent in same–store sales and 18 percent in operating profit. Yum raised its per–share earnings guidance for all of 2008 by 2 cents to $1.89; the company earned $1.68 per share last year.
  • DALLAS — SPARTANBURG, S.C. — DENNY’S CORP. on Monday reported a 2.8–percent drop in systemwide same–store sales for the second quarter, ended June 25. The decrease reflects declines of 0.7 percent in same–store sales at company units and 3.7 percent at franchised units, Denny’s said. At company stores, a 6.7–percent drop in customer traffic offset a 6.4–percent hike in check averages, Denny’s reported. The company also reported that it expects adjusted income before taxes for the second quarter to total $5 million to $5.5 million, compared with $1.5 million in the year–earlier quarter. The improvement would result from higher–margin franchise business, improved menu management and decreased interest and depreciation expenses, Denny’s said. Revenue for the second quarter is expected to total $190.0 million, compared with $240.9 million a year earlier. Denny’s said the drop would mainly reflect its sale of 137 restaurants to franchisees over the past year. Full second–quarter results are to be released July 29. Denny’s and its franchisees operate more than 1,500 namesake restaurants.
  • DALLAS — DAVE & BUSTER’S HOLDINGS INC., parent of the 49–unit dining and entertainment chain, on Friday filed with federal regulators for an initial public offering to raise up to $170 million. The company did not indicate how many shares it would offer or an anticipated per–share price. Dave & Buster’s said J.P. Morgan Securities and Jefferies & Co. would be underwriting the IPO. Earlier this year, Dave & Buster’s hired Jefferies & Co. to explore a possible sale. The Dallas–based chain is owned by WELLSPRING CAPITAL MANAGEMENT LLC.
  • DUBLIN, Ohio — WENDY’S INTERNATIONAL INC. said Thursday that U.S. same–store sales in the second quarter rose 0.1 percent at corporate restaurants and 1.1 percent at franchised Wendy’s units, aided by new–product introductions and strong results in June. Among menu items launched during the quarter were Frosty shakes and Chicken Go Wraps. The company said corporate same–store sales for the June 29–ended quarter benefited by about 0.3 percentage points from the earlier occurrence this year of the Easter weekend. Wendy’s, which is being acquired by Arby’s parent TRIARC COS. INC., expects to release its full quarterly earnings report Aug. 5, the same day as Triarc’s.
  • MARYVILLE, Tenn. — RUBY TUESDAY INC., parent of the 945–unit casual–dining brand, saw its share price rise nearly 18 percent in trading Thursday after it issued fiscal 2009 guidance that topped Wall Street’s expectations. However, the company also reported Wednesday that fiscal 2008’s fourth–quarter net profit fell 43 percent to $13.9 million for the June 3–ended period on continuing slow sales. Yesterday’s stock price surge marked a reversal for the company, whose shares have lost about 42 percent of their value this year. Ruby Tuesday’s 52–week high of $21.70 per share was hit last July 11. It closed Thursday at $6.24. The company forecast that per–share earnings for fiscal 2009 would be between 50 cents and 70 cents. According to Thomson Financial, analysts’ average estimate was 51 cents a share. Ruby Tuesday’s per–share earnings for the fourth quarter were 27 cents, compared with 46 cents a year earlier, when the company netted $24.7 million. The latest quarter’s EPS result exceeded the average analyst’s expectation by 6 cents. Fourth–quarter revenue dipped 4.3 percent from a year earlier to $341.4 million as same–store sales fell 10.3 percent at corporate units and 7.2 percent at domestic franchised units.
  • Wingstop Celebrates 20 Consecutive Quarters of Comp Store Sales Increases. The successive increase for the second quarter of 2008 was 6.8 percent, following an 8.9 percent increase in the first quarter of 2008 and an 11.8 percent increase in the fourth quarter of 2007. Wingstop has successively increased comp store sales in a market where other chains are struggling. In the April American Express MarketBrief, the 19 limited–service chains reporting fourth quarter figures tallied an average increase of 3.2 percent compared to Wingstop's 11.8 percent. Wingstop has maintained continuous comp store sales increases dating back to the third quarter of 2003.
  • BUCA, Inc. Announces Second Quarter 2008 Comparable Restaurant Sales Decreased 5.1%. BUCA, Inc. (NASDAQ: BUCA) today announced that Buca di Beppo comparable restaurant sales decreased 5.1% for the second quarter of fiscal 2008 as compared to the same period last year. The Company also announced that preliminary total revenue decreased 6.8% in the second fiscal quarter to approximately $57.9 million as compared to $62.1 million in the same period of the prior year. The difference between the comparable restaurant sales decrease and the preliminary total revenue decrease was due to the closure of three underperforming restaurants since the beginning of the second fiscal quarter of 2007.
  • LOS ANGELES — CALIFORNIA PIZZA KITCHEN INC. on Wednesday raised its guidance for second–quarter earnings as it reported better–than–expected preliminary results for the period. CPK now expects to earn 25 cents to 26 cents per share for the quarter ended June 29. That compares with a previous earnings projection of 16 cents to 17 cents a share. The operator, franchisor or licensor of 243 restaurants also reported that revenue for the second quarter increased 11.3 percent to $176.6 million, compared with $158.6 million in the same period a year earlier. Same–store sales rose 1.4 percent, CPK said. The company earlier had projected flat comparable–restaurant sales. Company officials credited improved operating efficiencies and a sales boost from a Thank You Card program for its second–quarter performance. Full financial results for the quarter are to be released Aug. 7. Despite the positive preliminary report, CPK stopped short of adjusting its full–year outlook because of “limited sales visibility and an ongoing concern for the economy.”
  • COLUMBUS, Ohio — Shareholders of MAX & ERMA’S RESTAURANTS have approved a $10.2 million going–private sale of the company, a spokesman said Tuesday. G&R ACQUISITION INC., led by Pittsburgh restaurateur GARY REINERT SR., will buy all of Max & Erma’s 2.6 million outstanding shares for $10.2 million, or about $4 each. A cash infusion from G&R will allow the 36–year–old, 106–unit chain to complete a remodeling program and resume expansion, Max & Erma’s spokesman ROBIN YOCUM said. The chain’s headquarters will remain in Columbus and its executives will stay on, Yocum added. The chain, including 27 franchised branches, operates in 13 states.
  • RICHARDSON, Texas — WINGSTOP said Monday that same–store sales rose 6.8 percent for its second quarter, marking the chain’s 20th consecutive quarter of positive comparable–store sales. The increase for the June–ended quarter followed an 8.9–percent increase in same–store sales in the first quarter and an 11.8–percent jump in the fourth quarter of 2007, the company said. Wingstop president and chief executive JAMES A. FLYNN said that online ordering and bundled meals have helped drive sales. Wingstop has more than 360 restaurants nationwide.

Back to Top